Apple Says Third-Party App Stores Would Open iPhones to Scammers

(Bloomberg) -- Apple Inc. is raising fears about letting users install applications outside the company’s App Store and urged U.S. lawmakers to reject proposed legislation that it says would loosen the iPhone’s security.

The company said Wednesday on its website that requiring apps to be downloaded from the App Store protects consumers against scams, keeps their privacy safe and provides developers payment for their work. All those benefits could disappear if apps can be downloaded from third-party app stores with lesser protections or users get an app from a website or PC and “sideload” it onto the phone.

The U.S. House Judiciary Committee Wednesday discussed six proposed antitrust bills, including one sponsored by Representative David Cicilline, a Democrat from Rhode Island and chairman of the antitrust subcommittee, that, if passed into law, could call for Apple to open up to third-party app stores and provide all of its iPhone technologies to third-party software makers.

“It shall be unlawful for a person operating a covered platform, in or affecting commerce, to restrict or impede the capacity of a business user to access or interoperate with the same platform, operating system, hardware and software features that are available to the covered platform operator’s own products, services, or lines of business,” according to an early copy of the bill.

Apple, in a letter to lawmakers, said it was “concerned that current proposals would harm consumer privacy, device security, and innovation. We urge the Committee not to approve the proposed legislation in its current form, and we look forward to engaging with the Committee going forward.”

Last year, the European Union published a draft of its Digital Markets Act, which could also force Apple to allow third-party app stores. The push by lawmakers and regulators comes weeks after iPhone maker’s trial with Epic in which the maker of Fortnite asked a court to force Apple to allow third-party download stores.

Mobile applications are a $142 billion market with the App Store, by some estimates, taking in more than $20 billion a year for Apple with a profit margin north of 75%.

“Allowing sideloading would degrade the security of the iOS platform and expose users to serious security risks not only on third-party app stores, but also on the App Store,” the Cupertino, California-based technology giant said on its website. “Because of the large size of the iPhone user base and the sensitive data stored on their phones -- photos, location data, health and financial information -- allowing sideloading would spur a flood of new investment into attacks on the platform.”

The company said sideloading and downloads from third-party app stores would wipe out years of privacy features baked into Apple’s mobile operating system and make it more like Google’s Android system, creating fewer smartphone alternatives for consumers. The company said sideloading would “blunt the growth of the app economy, harming both users and developers” as consumers worried about privacy are likely to download fewer apps.

“Allowing sideloading would spur a flood of new investment into attacks on iPhone, incentivizing malicious actors to develop tools and expertise to attack iPhone device security at an unprecedented scale,” the company added.

Cicilline’s proposed legislation could also potentially force Apple to open more of its underlying technologies to third-party developers. The company currently gives developers access to thousands of technologies, known as APIs or application programming interfaces, to tap into the iPhone’s features like the music player or web browser. But Apple, citing privacy concerns, bars access to some aspects like health data and the phone’s secure storage component for storing payment and facial recognition data.

Though the proposals that most threaten Apple aren’t likely to become law as written, they show members of Congress are seeking ways to curb the dominance of tech behemoths and preview how they’re seeking to strengthen antitrust enforcement.

(Updates with details from Apple’s letter to lawmakers in the fifth paragraph.)

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